Financial Management MCQ

Financial Management MCQ

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  • 03rd Apr, 2021

Financial Management MCQ with Answers

Following are mostly asked Financial management MCQ test that are designed for professionals like you to crack you interviews. You can take this Financial management online test before appearing to you real interview. This Financial management quiz there are around 30+ multiple choice questions on Financial management with four options.

1) The only feasible purpose of financial management is

  • A. Wealth Maximization
  • B. Sales Maximization
  • C. Profit Maximization
  • D. Assets maximization

2) Agency cost consists of

  • A. Monitoring
  • B. Binding
  • C. Opportunity and structure cost
  • D. All are Correct

3) Heterogeneous cash flows can be made comparable by

  • A. Discounting technique
  • B. Compounding technique
  • C. Either a or b
  • D. None of the above

4) Efficient frontier comprises of

  • A. Inefficient portfolios
  • B. Efficient portfolios
  • C. Portfolios that have positively correlated securities
  • D. Portfolios that have negatively correlated securities

5) Present value tables for annuity cannot be straight away applied to varied stream of cash flows.

  • A. True
  • B. False

6) Financial management process deals with

  • A. Investments
  • B. Financing decisions
  • C. Both a and b
  • D. None of the above

7) Investment is the _________

  • A. net additions made to the nation’s capital stocks
  • B. person’s commitment to buy a flat or house
  • C. employment of funds on assets to earn returns
  • D. employment of funds on goods and services that are used in production process

8) Financial management is mainly concerned with________

  • A. Arrangement of funds
  • B. Profit maximization
  • C. Efficient Management of every business
  • D. All aspects of acquiring and utilizing financial resources for firms activities

9) The primary goal of financial management is ________

  • A. to maximize the return
  • B. to minimize the risk
  • C. to maximize the wealth of owners
  • D. to maximize profit

10) Market value of the shares are decided by ________.

  • A. shareholders
  • B. the government
  • C. the investment market
  • D. the respective companies

11) The expansion of CAPM is _________.

  • A. Capital amount pricing model
  • B. Capital asset pricing model.
  • C. Capital asset printing model.
  • D. Capital amount printing model.

12) Working capital management is managing ________.

  • A. only short term assets
  • B. long terms liabilities
  • C. long term assets
  • D. short term assets and liabilities

13) Future value interest factor takes _______.

  • A. Compounding rate
  • B. Discounting rate
  • C. Inflation rate
  • D. Deflation rate

14) Required rate of return>Coupon rate, the bond will be valued at

  • A. Premium
  • B. Par value
  • C. Discount
  • D. None of the above.

15) GST is a consumption of goods and service tax based on.

  • A. Destination
  • B. Dividend
  • C. Destiny
  • D. Duration

16) _________ are financial assets.

  • A. Bonds
  • B. Machines
  • C. Stocks
  • D. A and C

17) A bond is said to be issued at premium when

  • A. Coupon rate>Required returns
  • B. Coupon rate=Required returns
  • C. Coupon rated) None of the above
  • D. All of the mentioned

18) What does financial leverage measured?

  • A. No change with EBIT and EPS
  • B. The sensibility of EBIT with % change with respect to output
  • C. The sensibility of EPS with % change in the EBIT level
  • D. % variation in the level of production

19) The ratio analysis is helpful to management in taking several decisions, but as a mechanical substitute for judgment and thinking, it is worse than useless.

  • A. True
  • B. False

20) EBIT is usually the same thing as

  • A. funds provided by operations
  • B. earnings before taxes
  • C. net income
  • D. operating profit

21) Savings accounts are ______ but are not ______.

  • A. negotiable; liquid
  • B. liquid; marketable
  • C. marketable; liquid
  • D. liquid; personal

22) Treasury bills are traded in the _______.

  • A. money market
  • B. capital market
  • C. government market
  • D. regulated market

23) Treasury bills are traded in the _______.

  • A. money market
  • B. capital market
  • C. government market
  • D. regulated market

24) Which of the following falls under Profitability ratios?

  • A. General Profitability ratios
  • B. Overall Profitability ratios
  • C. Comprehensive Profitability ratios
  • D. A and B

25) Net working capital is the excess of current asset over _______.

  • A. Current liability
  • B. Net liability
  • C. Total payable
  • D. Total liability

26) The coupon rate is another name for the ______.

  • A. yield to maturity
  • B. current yield
  • C. market interest rate
  • D. stated interest rate

27) Dividends are paid________.

  • A. yearly
  • B. quarterly
  • C. semi-annually
  • D. monthly

28) The relationship between the cost of equity and financial leverage in accordance with MM proposition II can be expressed by

  • A. R = Equity/Debt x 100
  • B. rE = r0 + (r0 - rD)(1 - TC)
  • C. R = Equity/100
  • D. R = Equity/Income

29) Earning Yield computed by

  • A. EPS/Profit x 100
  • B. EPS/Market Price
  • C. Paid up value of Share/100
  • D. EPS/Current Market Price Per Share

30) The Present Value of all inflows are cumulated in

  • A. Order of Time
  • B. Order of Sales
  • C. Order of Cash
  • D. Order of Investment

31) Which is called as Dividend Ratio Method?

  • A. Debt Equity Method
  • B. Dividend Yield Method
  • C. Equity Method
  • D. Asset Method

32) Which formula may be used for 'EPS'?

  • A. Net Profit/100 x Share Capital
  • B. Net Profit/Sales
  • C. Dividend/Net Profit x 100
  • D. Net Income - Dividend on Preferred Stock/Average outstanding Shares

33) Factoring involves

  • A. Sales ledger management
  • B. Purchase and Collection of debts
  • C. Provision of Specialised Services relating to credit investigation
  • D. All are Correct

34) If cash inflows are not uniform, the calculation of pay-back period takes a

  • A. Favourable Position
  • B. Common Profit
  • C. Cumulative Form
  • D. All are Correct

35) Capital Employed is

  • A. Cash + Bank
  • B. Bank
  • C. Assets + Cash
  • D. Shareholders Funds + Long Funds

36) The term "capital structure" refers to:

  • A. long-term debt, preferred stock, and common stock equity
  • B. current assets and current liabilities.
  • C. current assets and current liabilities.
  • D. shareholders' equity.

37) Operating leverage can be computed by

  • A. Sales/EBIT
  • B. Fixed Cost/EBIT
  • C. EBIT/Fixed Cost x Capital Employed
  • D. %change in EBIT/% change in Sales

38) The proposal is accepted if the profitability index is more than

  • A. Zero
  • B. One
  • C. Three
  • D. Five

39) Which is the traditional method of Capital budgeting?

  • A. Accounting Method
  • B. Pay out Method
  • C. Pay back Method
  • D. All are Correct

40) In the _______________, the future value of all cash inflow at the end of time horizon at a particular rate of interest is calculated.

  • A. Risk-free rate
  • B. Compounding technique
  • C. Discounting technique
  • D. Risk Premium

Financial Management Online Test Questions (Financial Management FAQs)

1) Explain What is financial management?

Financial Management refers to the organizing, strategic planning, directing and even controlling the understanding of the finance in the institute or organization.

2) What is risk in financial management?

In financial terms risk is a scope which a person gains as a part of investment that may differ from an outcome or return which is unexpected. This includes the chance of losing some or even all the original investment.

3) On what basis the cost of debt capital is calculated?

For calculating the debt cost, the company needs to understand the whole interest amount which is paying in every debt of the year. Further the vision of this number is made as per the total debt. The reason is then the debt cost. To be precise the formula is interest rate multiplied by (1 - tax rate).

4) List different types of risk in financial management?

The common types of the financial risk are Credit risk, liquidity risk, asset-backed risk, foreign investment risk, equity risk, and currency risk.

5) What is an asset?

In the accounting of finance basically asset is the resource that is controlled and even owned by the business entity and even by economic entity. It is more like a resource with individual or corporation controls.

6) What is inventory management?

Inventory Management is one kind of systematic approach to store, source and even sell of the inventory which includes the finished goods and also the raw materials.

7) List some functions of Financial Management?

Functions of financial management are

  • Estimating the Amount of Capital Required
  • Determining Capital Structure
  • Choice of Sources of Funds
  • Procurement of Funds
  • Utilisation of Funds
  • Disposal of Profits or Surplus
  • Management of Cash
  • Financial Control

8) What is FMIS?

FMIS (Financial Management Information Systems) offers best possible supporting the integration and automation of the public financial management processes which includes the execution, budget formulation reporting and even accounting.

9) What are characteristics of a financially healthy institution?

A healthy organization is organization that comes with good income to make sure the programming is stable. There is also the financial health non profit solution which is now an internal cash source. It also includes the financial management, stability and even Institutionalization.

10) Explain heterogeneous cash flows?

Firstly, you must understand that cash flow is the rise of the money of an institution, business and even the individual. Further Heterogeneous cash flows is made comparable with Compounding or discounting technique

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